MEMORANDUM OPINION AND ORDER
TOM S. LEE, District Judge.
This cause is before the court on the motion of plaintiff First Bank and the cross motion of defendant Eastern Livestock Company (Eastern) for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Each party has responded to the motion of the other and the court has considered the memoranda of authorities, together with attachments, submitted by the parties. The court concludes, based on its review of applicable authorities and its evaluation of the parties’ evidence, that both parties’ motions must be denied.
FACTS
Eastern is a company which is engaged in the day-to-day purchase of farm products (cattle). Beginning in January 1989, Eastern engaged in cattle purchase and sales transactions with one Harry Wells, an individual in the business of buying and selling cattle. Through a series of cattle purchase confirmation contracts between Wells and Eastern, Wells took delivery of cattle from Eastern over a period of months and, after “fattening” the cattle, resold the cattle to Eastern by a date agreed upon by those parties in their contracts and at a prearranged price per pound. On May 23, 1989, Eastern tendered to Wells a check in the amount of $253,647.92, representing payment for the fatted cattle that Wells resold to it under the contracts.
First Bank, contending that it held a prior perfected security interest as to the cattle involved in these transactions, brought this action for conversion against Eastern seeking to recover the full amount paid by Eastern to Wells. On its present motion for summary judgment, First Bank alleges that it did all that was necessary under the law to perfect its security interest in the cattle which Eastern purchased from Wells and that Eastern, despite having both actual and constructive notice of the Bank’s lien, paid the entire
purchase price for the cattle to Wells alone, in violation of the Bank’s security interest. Finally, First Bank avers that Wells, though indebted to it for a sum in excess of the $253,647.92 paid to him by Eastern, has never accounted to or paid First Bank any of the money which Eastern paid to him. Thus, First Bank argues that it is entitled to summary judgment against Eastern on its complaint for conversion. Eastern denies that First Bank is entitled to judgment in its favor, and claims, to the contrary, that judgment should be entered for Eastern since First Bank did not have a perfected security interest in the subject cattle.
One who violates a valid security interest of a financial institution by not accounting to that financial institution for its security interest is subject to liability for conversion of the institution’s funds.
See Oxford Production Credit Ass’n v. Dye,
368 So.2d 241 (Miss.1979);
United States v. Harrell’s Stockyards, Inc.,
652 F.Supp. 452 (S.D.Miss.1987). The issue presented by this case is whether Eastern purchased cattle from Wells subject to a prior perfected security interest by First Bank. The answer to the question depends, ultimately, on whether First Bank had a valid security interest in the cattle that was ■ the subject of the Eastern/Wells transaction and if so, whether it complied with the requirements of state and federal law pertaining to the giving of notice of its alleged security interest to prospective buyers of the cattle, including Eastern.
THE FOOD SECURITY ACT AND MISSISSIPPI’S CENTRAL FILING SYSTEM
In 1985, Congress, finding that certain State laws allowed a secured lender to “enforce liens against a purchaser of farm products even if the purchaser [did] not know that the sale of the products violate[d] the lender’s security interest in the products, lack[ed] any practical method for discovering the existence of the security interest, and ha[d] no reasonable means to ensure that the seller use[d] the sales proceeds to repay the lender,” 7 U.S.C. § 1631(a), passed the 1985 Farm Bill, popularly known as the Food Security Act (the FSA), “to remove [the] burden on and obstruction to interstate commerce in farm products” caused by such State laws, 7 U.S.C. § 1631(b). In order to make information more readily available to purchasers of farm products, the FSA provides for the establishment by each state of a “central filing system” in order that lenders may file “effective financing statements ... on a statewide basis.” 7 U.S.C. § 1631(c)(2). This is accomplished by the lender’s filing of the prescribed financing statement with the office of the State’s Secretary of State. Under the FSA, the State’s Secretary of State is required to maintain a master list of all financing statements filed by lenders, and to make that list available on a regular basis to buyers of farm products who register to receive information concerning debtors. 7 U.S.C. § 1631(c)(2)(D). Buyers who do not register pursuant to subsection (e)(2)(D) may nevertheless receive information concerning a debtor by requesting such information of the Secretary of State in accordance with the procedures established by the FSA.
On December 24,1986, following Congress’ enactment of the FSA, Mississippi’s Secretary of State prescribed regulations for the implementation of a central filing system in conformity with the requirements set forth in the FSA for the centralized filing of security interest documents covering farm products.
See
Miss.Code Ann. § 75-9-319 (directing Secretary of State to issue regulations).
The FSA provides that “in the case of a farm product produced in a State that has established a central filing system,” a buyer of farm products will take such products subject to a security interest created by the seller if
(A) the buyer has failed to register with the Secretary of State of such State prior to the purchase of farm products; and
(B) the secured party has filed an effective financing statement or notice that covers the farm products being sold....
7 U.S.C. § 1631(e)(2).
Unless these conditions are satisfied, then,
notwithstanding any other provision of Federal, State, or local law, a buyer who in the ordinary course of business buys a farm product from a seller engaged in farming operations shall take free of a security interest created by the seller, even though the security interest is perfected; and the buyer knows of the existence of such interest.
7 U.S.C. § 1631(d).
Mississippi law similarly provides:
[A] secured party may not enforce a security interest in farm products against a buyer ... who purchases or sells farm products in the ordinary course of business from or for a person engaged in. farming operations unless the secured party has complied with the regulations issued by the Secretary of State under Section 75-9-319- or unless the buyer ... has received from the secured party or seller written notice of the security interest which complies with the requirements of Section 1324 of the Food Security Act of 1985....
Miss.Code Ann. § 75-9-307(4). And the state regulations explain:
Upon filing in the system, buyers ... not registered with the system are subject to the security interest in that product whether or not they know about it, even if they are outside the state.
Miss. Central Filing Sys. Reg. § 2.05(B).
In the ease at bar, it is undisputed that Eastern was not registered with the Secretary of State under Mississippi’s central filing system.
Consequently, Eastern would be subject to a security interest by First Bank reflected in any “effective financing statement” filed by First Bank with the Secretary of State. The issue is whether First Bank filed an “effective financing statement” which covered the cattle that was the subject of the Wells/Eastern transaction. In this regard, the evidence shows that on April 2, 1987, First Bank filed a financing statement (a UCC-1F)
with the Secretary of State which showed Harry Butler Wells as the debtor and which, following the space on the form providing, “This Financing Statement covers the following types (or items) of property,” recited:
All Beef and Dairy Cattle, branded or unbranded, including cows, calves, heifers, steers, and bulls, now owned by Debtor or hereafter acquired, and all farm supplies and farm equipment now owned by Debtor or hereafter acquired. Livestock to be kept on real estate owned by Bobby Ca-ston and located on HWY 569, Amtie [sic] County, Ms. and leased by Debtor.
The FSA prescribes the information which an “effective financing statement” must contain:
(i) the name and address of the secured party;
(ii) the name and address of the person indebted to the secured party;
(iii) the social security number of the debt- or or, in the case of a debtor doing business other than as an individual, the Internal Revenue Service taxpayer identification number of such debtor;
(iv)
a description of the farm products subject to the security interest, including the amount of such products where applicable; and a reasonable description of the property, including county or parish in which the property is located
[.]
7 U.S.C. § 1631(e)(4) (emphasis supplied). Mississippi’s regulations similarly require that an effective financing statement include a “description of farm products subject to the security interest to include county where collateral produced and amount of such product where applicable.” Miss. Central Filing Sys. Reg. § 1.00(D). The regulations also provide for the inclusion in an effective financing statement of
further details of the farm product subject to the security interest if needed to distinguish it from other such product owned by the same person but not subject to the particular security interest.
Miss. Central Filing Sys.Reg. § 2.01(H). Finally, as is pertinent here, the regulations state, at section 5.04, under the heading “AMOUNT AND REASONABLE DESCRIPTION,” that:
ifc %
ij:
*
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(C) Any EFS and master list entry will identify each county in Mississippi where the product is produced. If no further identification of the location of the product is shown, this means that all such product in each such county owned by such person is subject to the security interest.
(D) The need to supply additional information arises only where some of that product owned by that person is subject to the security interest and some is not.
(E) The additional information about amount and property must be sufficient to enable a reader of the information to identify what product owned by that person is subject [to the security interest], as distinguished from what of the same product owned by the same person is not subject. The precision needed, in the description of the amount and location, will vary from case to case.
(F)The basis for this is to make information available as necessary to enable an identification of what product is subject to a security interest as distinguished from what is not.
ANALYSIS
There is no doubt that First Bank’s April 2, 1987 financing statement is an “effective financing statement” that would have covered all cattle which Wells then owned or thereafter acquired which were “kept on real estate owned by Bobby Caston and located on HWY 569” in Amite County. However, it is uncontroverted that Wells, the debtor, lost the lease on the real estate owned by Bobby Caston on Highway 569 in Amite County in approximately May 1987, a month after this financing statement was filed, and that he has neither leased the property nor had cattle on the property since that time. More to the point, none of the cattle involved in the Eastem/Wells transaction was ever pastured “on real estate owned by Bobby Caston and located on HWY 569” in Amite County. Thus, what must be determined as between Eastern and First Bank is whether the Bank’s financing statement is an “effective financing statement” as to cattle which were never kept on the Bobby Caston property, including the cattle which Eastern purchased from Harry Wells. In other words, does this financing statement “cover the farm products being sold” by Wells to Eastern in 1989? To answer this question requires a determination of whether the description of the collateral in the financing statement was sufficient to perfect a security interest in the cattle purchased by Eastern.
The parties in this case agree that in order to qualify as an “effective financing statement,” the First Bank UCC-1F need not have specifically identified the location of the
cattle subject to the security interest.
Their disagreement stems from the language in the document which refers to the location of secured property:
Livestock to be kept on real estate owned by Bobby Caston and located on HWY 569, Amtie [sic] County, MS. and leased by Debtor.
First Bank asserts that inasmuch as the secured property was not required to be described as to location, “[t]he language as to the location of the cattle being on a certain farm is surplusage.” First Bank further describes this language as a “minor addendum.” Eastern, on the other hand, disputes First Bank’s characterization of this language, and maintains instead that the language was specifically and intentionally included for the very purpose of “distinguish[ing] [the cattle subject to First Bank’s security interest] from other [cattle] owned by [Wells] but not subject to [First Bank’s] security interest.” In support of its position, Eastern has submitted the affidavit of Harry Wells, the debtor. Wells explains that in the early part of 1987, he borrowed money from First Bank and pledged as security the cattle purchased with the loan proceeds. Wells states that the location of the livestock was inserted on the financing statement
[f]or proper identification of the livestock that was subject to the instrument.... This [language] was expressly inserted so that the livestock subject to the UCC-1F could be distinguished from other livestock which might have been financed by other persons as I was, on a daily basis, engaged in the buying and selling of cattle throughout all time periods relevant hereto.
It is apparent that in the circumstances of this case, summary judgment cannot be entered for First Bank. While the parties have addressed, at length, the requisites for perfection of First Bank’s claimed security interest, it has become evident that this case concerns not only whether First Bank
perfected,
a security interest in the disputed cattle, but more fundamentally, whether it actually had a security interest in the cattle that were the subject of the Eastern/Wells transactions. “In order to create an effective security interest under the UCC, there must be a written security agreement containing a description of the collateral.”
Federal Land Bank of St. Paul v. Bay Park Place, Inc.,
162 Mich.App. 1, 5, 412 N.W.2d 222, 224 (1987). That is, a security interest “attaches” when the debtor signs a valid security agreement which covers the collateral.
See
Miss.Code Ann. § 75-9-203(l)(a).
That security interest is “perfected” when the secured party files an effective financing statement including,
inter alia,
“a description of the farm products subject to the security interest” established by the security agreement. A financing statement does not create a security interest and cannot extend a security interest beyond what is described in the security agreement.
Bay Park Place,
412 N.W.2d at 224;
In re Mann,
318 F.Supp. 32, 36 (W.D.Va.1970) (“A financing statement cannot add collateral not described in the security agreement.”).
Though First Bank asserts in the case at bar that it acquired a security interest in all cattle purchased by Harry Wells from and after June 1984, it has presented no evidence to substantiate its claim. That is, it has not presented a security agreement showing the source, nature or extent of its claimed security interest.
Before there could be any definitive answer to the question whether First Bank
perfected
a security
interest in the subject cattle, there must be a determination of the actual nature and scope of First Bank’s security interest in Wells’ property. Since a necessary prerequisite to First Bank’s perfecting a security interest is First Bank’s
having
a security interest to perfect, then in the absence of proof concerning the nature and scope of First Bank’s security interest in Wells’ property,
the court could not grant First Bank’s request for summary judgment even if the financing statement clearly covered
all
of Wells’ livestock, without reference to any limitation as to location.
That being said, the court still must decide whether Eastern is entitled to summary judgment.
Even assuming
arguendo
that First Bank had a valid security interest in the Eastern cattle, the issue on Eastern’s motion for summary judgment is still whether the description in the financing statement of the collateral subject to First Bank’s security interest was sufficient to cover the cattle that were purchased by Eastern. The Bank’s financing statement refers to “[a]ll ... Cattle ... now owned by Debtor or hereafter acquired.” If it said nothing more, then there would be no need to proceed further, for the court would not hesitate in that circumstance to conclude that the cattle at issue were unequivocally covered by the description. But the description does not stop there. Rather, it goes on to state, “Livestock to be kept on real estate owned by Bobby Caston and located on HWY 569, Amtie [sic] County, Ms. and leased by Debtor.” While First Bank asserts that the additional language concerning the location of the cattle was “mere surplusage,” the language, in the court’s opinion, renders the financing statement at least ambiguous.
See In re Tri-State Equip., Inc.,
792 F.2d 967, 970 (10th Cir.1986) (sufficiency of notice given by financing statement must be answered primarily by referring to law);
Wilson v. United States Fidelity & Guar. Co.,
830 F.2d 588 (5th Cir.1987) (whether ambiguity exists is a question of law).
But what is the effect of
that ambiguity?
This court has located no case which has considered the sufficiency of a collateral description in an “effective financing statement” under the FSA, or the effect of an ambiguous description in an FSA financing statement. There is, however, a considerable body of law under the Uniform Commercial Code relating to when a financing statement with a misdescription, or with a vague or ambiguous description, will provide notice which is legally sufficient to perfect a security interest.
In re Tri-State Equip., Inc.,
792 F.2d 967, 969 (10th Cir.1986). By far, the majority of courts addressing the adequacy of financing statements under the U.C.C. have held that a financing statemént, in order to perfect a security interest, need not specifically identify the property which is the subject of a security interest; rather, it is sufficient if the description would put a reasonably prudent prospective lender or buyer on notice that the collateral sought to be purchased or encumbered might be the subject of a preexisting security interest.
See, e.g., In re McBee,
714 F.2d 1316, 1321 (5th Cir.1983) (critical inquiry in assessing whether security interest is perfected is “whether a reasonably prudent subsequent creditor would have discovered the prior security interest.”);
United States v. Crittenden,
600 F.2d 478, 480 (5th Cir.1979) (whether record gives sufficient notice “ ‘depends ... on what a person of ordinary business prudence would have found out from pursuing such lines of inquiry as the data given ... would naturally suggest to his mind’ ”) (quoting
Yancy Bros. v. Dehco,
108 Ga.App. 875, 877-78, 134 S.E.2d 828, 831 (1964)). That is because the sole function of financing statements under the U.C.C. is to put third parties — usually prospective buyers or lenders— on notice that there may be an enforceable security interest in the property of the debt- or.
Kubota Tractor Corp. v. Citizens & Southern Nat’l Bank,
198 Ga.App. 830, 833, 403 S.E.2d 218, 222 (1991). And, “[sjince the financing statement is designed only to provide general notice or warning that certain collateral might already be encumbered,”
Production Credit Ass’n v. Bartos,
430 N.W.2d 238, 241 (Minn.Ct.App.1988), the financing statement “need not provide interested parties with all of the information he needs to understand the secured transaction, but only with the information that such a transaction has taken place and that the particulars thereof may be obtained from the named secured party at the address shown.”
South County Sand & Gravel Co. v. Bituminous Pavers Co.,
106 R.I. 178, 256 A.2d 514 (1969).
See also Thorp Commercial Corp. v. Northgate Indus., Inc.,
654 F.2d 1245, 1248 (8th Cir.1981) (“The description of collateral
in the financing statement does not function to identify the collateral and define property which the creditor may claim, but rather to warn other subsequent creditors of the prior interest.”);
United States v. Southeast Mississippi Livestock Farmers Ass’n,
619 F.2d 435, 439 (5th Cir.1980) (Mississippi law) (description sufficient if a reasonable party examining the financing statement would have been alerted to direct an inquiry to secured party to determine what, if any, security interest in collateral was held by secured party);
Crittenden,
600 F.2d at 480 (“[W]hile not wholly necessary that physical description appearing of record be sufficient in itself to identify the property, it must raise a warning flag, as it were, providing a key to the identity of the property.”) (quoting
Yancy Bros, supra); Bay Park Place,
412 N.W.2d at 224 (“Even though the instrument lacks details, if it gives clues sufficient that third persons by reasonable care and diligence may ascertain the property covered, it is adequate.”);
Kubota,
403 S.E.2d at 222 (“[A] financing statement is designed to notify third parties that there may be an enforceable security interest in the property of the debtor.”);
In re Wood,
38 Bankr. 375, 377 (Bankr.D. Idaho 1983) (“The function of the financing statement requirement is to give notice of a potential interest in property of a specifically identified debtor as well as means by which an inquiring party may acquire more detailed information concerning that interest.”);
In re Hemminger,
20 Bankr. 357, 360 (Bankr.W.D.Pa.1982) (“[T]he purpose of the financing statement is merely to warn creditors, rather than identify collateral.”).
Given the notice function served by U.C.C. financing statements, most courts which have addressed the issue have held that a financing statement is sufficient to perfect a security interest, even if information in it is vague or ambiguous, so long as the information is not “seriously misleading.”
See In re Waters,
90 Bankr. 946, 960 (Bankr.N.D.Iowa 1988) (“key is whether a potential creditor would have been misled”);
In re King,
30 Bankr. 2, 4 (Bankr.E.D.Tenn.1983) (even if some ambiguity existed, “description was adequate to afford notice to interested parties that the Bank claimed a security interest in plaintiffs’ computer equipment”);
In re Tri-State Equip.,
792 F.2d at 972 (“even an imprecisely worded statement can be sufficient;” question is whether description is “so ‘seriously misleading1 ... that it would simply stop future creditors from making the further inquiries they were obligated by the U.C.C. to make”);
In re McBee,
714 F.2d at 1321 (“Perfect accuracy ... is not required as long as the financing statement contains sufficient information to ‘put any searcher on inquiry’.”). Only where the financing statement does not perform its notice function by reason of an inadequate, ambiguous or misleading description of the encumbered property will it be deemed insufficient to constitute perfection of the secured party’s interest in the collateral.
See Thorp Commercial Corp.,
654 F.2d at 1252 (“The financing statement would not provide notice where the description of collateral is misleading, for example, if the description were simply wrong or if the description seemingly would not cover the collateral but contained coverage under some hidden ambiguity that could not be considered reasonable notice.”);
In re Copper King Inn, Inc.,
918 F.2d 1404, 1408 (9th Cir.1990) (financing statement insufficient where hypothetical creditor could have been led astray);
In re Katz,
563 F.2d 766, 767 (5th Cir.1977) (where language of financing statement would not have alerted subsequent potential secured party to need for additional inquiry concerning whether debt- or’s inventory was encumbered, prior se
cured party’s security interest in inventory was unperfected).
These principles pertaining to U.C.C. financing statements are derived from application of specific U.C.C. provisions. The court in
In re Tri-State Equipment, Inc.,
792 F.2d 967 (10th Cir.1986), was faced with a financing statement which, on its face, revealed three possible interpretations of what was described. The question was, therefore, “what effect a financing statement has, when the language it uses has several distinct meanings.”
Id.
at 970. The answer to that question was found in these Code provisions:
Section [9 — 102(1) ] broadly commands that a financing statement “is sufficient if it contains a statement
indicating the types,
or describing the items, of collateral” (emphasis added). Similarly, § [9-402(8)] provides that a financing statement “substantially complying with requirements of this section is effective even though it contains minor errors which are not seriously misleading.” And § [9-110] states that “any description of personal property [under this Article] is sufficient ... whether or not it is specific if it reasonably identifies what is described.”
Id.
The court noted that these provisions evidenced the U.C.C.’s “broad policy of lenity,” and went on to explain further:
It was the stated intent of the drafters of the U.C.C. financing statement rule to create only a “simple” system of “notice filing,” with minimal formal requirements.
See
§ [9-102] official comment, 1-2. Under the U.C.C. system, a proper financing statement will show “merely that the secured party who has filed
may
have a security interest in the collateral described.”
Id.
official comment 2 (emphasis added). The drafters frankly acknowledged their expectation that, after a potential lender has encountered a financing statement, “further inquiry ... will be necessary to disclose the complete state of affairs.”
Id.
...
The burden is placed on later creditors to protect themselves by getting full information on any prior agreements flagged by the minimal financing statement filing.
For these reasons, the settled rule ... is that the description in the filing “need only
put other creditors on notice of a possible security interest in the collateral
in question.” ... Most other courts are also now willing to find a description that is unclear or susceptible to more than one distinct meaning sufficient in circumstances in which the description would put other creditors on notice of the need for further inquiry.
Id.
(quoting
Platte Valley Bank v. B. & J. Constr., Inc.,
44 Colo.App. 21, 606 P.2d 455, 456 (Colo.App.1980) (additional citations omitted)).
See also Thorp Commercial Corp.,
654 F.2d at 1249.
It seems reasonably clear, and the cited cases support the notion that a financing statement, though ambiguous, may nevertheless provide adequate notice to a prospective purchaser or lender that such party should make further inquiry to ascertain the extent of the collateral covered by a secured party’s agreement with the debtor. That is, a description in a financing statement may induce further inquiry by a prospective purchaser or lender in spite of an ambiguity in the description. Essentially, the question is one of degree: Is the description so ambiguous that a party reading it might not reasonably comprehend that the property sought to be purchased or further encumbered is covered, or is the ambiguity such as would indicate to the party reading it that he should undertake additional inquiry from external sources (e.g., the secured party) to ascertain whether the property at issue is, in fact, subject to a preexisting security interest. If the ambiguity were misleading such that it could not be considered to provide reasonable notice that the subject property was encumbered, then the financing statement would not constitute perfection of that security interest.
In the ease at bar, the description in First Bank’s UCC-1F is obviously ambiguous, and if, as the Bank claims, it was intended to cover cattle other than cattle located on the Bobby Caston property, it could, on a cursory reading, perhaps prove somewhat misleading. However, having carefully considered the description at issue in this case, the court does not consider that the description provided by First Bank in its financing statement is seriously misleading such that» a reasonably prudent buyer would not have been on notice that it should pursue available avenues of inquiry to determine the meaning of the language used in the description. That is, while a reader could not have gleaned
from
this description exactly what was covered, neither could a reader have been assured by the description that all of Wells’ cattle were not covered.
The FSA, like the U.C.C.’s financing statement provisions, was established as a means of providing notice to third parties of security interests created by debtors and-is concerned primarily with notice. That is, the FSA, like the U.C.C. financing statement provisions, is notice-oriented.
See Lisco State Bank v. McCombs Ranches, Inc.,
752 F.Supp. 329, 338 (D.Neb.1990) (The FSA “is intended principally as a notice statute to protect buyers of farm products from the threat of double payment.”). The two enactments are arguably distinguishable in that the avowed purpose of the FSA is for the protection of
buyers,
not lenders. However, while the FSA is intended to protect buyers of farm products, it is meant only to protect them from the dangers of double payment where they might not know, or have any practical means of learning of a preexisting security interest in property. In other words, the protection afforded buyers is simply
notice
of security interests created by their sellers. A second distinction is revealed by a comparison of the language of the statutes as they relate to the identification of collateral. It appears that the requirements under the FSA relating to collateral description may be stricter than those of the U.C.C. Whereas a U.C.C. financing statement need only contain “a statement indicating the types, or describing the items, of collateral,” an effective financing statement under the FSA must contain “a description of the farm products subject to the security interest....”
However, as does the U.C.C., the FSA will recognize an effective financing statement as sufficient if it “substantially complies with the requirements [relating to information which must be included] even though it contains minor errors that are not seriously misleading.” 7 U.S.C. § 1631(c)(4)(I).
See also Lisco,
752 F.Supp. at 337 (FSA “allows for some deviation from stated requirements [for effective financing statements] if such departure is not ‘misleading’.”). In this court’s view, the proper focus should be, not on whether the
lender could have made itself more clear,
but rather on whether the financing statement is adequate to warn prospective purchasers that there is a pre-existing security interest. And, as the court has determined, the description here was sufficient to put potential purchasers such as Eastern on notice that inquiry was necessary to determine (or at least clarify) the extent of the Bank’s security interest. The court must therefore conclude that summary judgment may not be entered for Eastern.
First Bank argues that regardless of the disposition of the issue of whether First Bank’s UCC-1F was sufficient, it is entitled to summary judgment since Eastern had actual notice of First Bank’s security interest by virtue of Wells’ having identified First Bank as a lienholder on a certain cattle purchase confirmation contract with Eastern. However, whether Eastern had actual notice of the Bank’s claimed security interest is not material. The Act provides the only means by which a buyer may be made subject to a security interest, i.e., filing of an “effective financing statement” or providing “written notice,” and explicitly states that unless one of those methods is followed, then a buyer who buys a farm product in the ordinary course of business from a seller engaged in farming operations takes free of a security interest created by the seller, even if “the buyer knows of the existence of such interest.” Thus, actual notice is not relevant, unless such actual notice is imparted to the buyer
by the secured 'party
in the manner prescribed by the Act.
Based on the foregoing, it is ordered that the motions of both parties for summary judgment are denied.
ORDERED this 27th day of July, 1993.